Category: Affordable Care Act

3/20/2018

by Chris Byrd

We’ve just returned from Capitol Hill, where WEX Health attended the nonprofit Employers Council on Flexible Compensation (ECFC) 37th annual conference, March 14-16, to promote choice in benefit solutions. Much of the conversation in D.C. this year was around three major issues which affect tax-advantaged health benefit accounts that are a central element of a Consumer-Directed Health strategy:

The Excise Tax on High-cost Health Plans.

Commonly known as the Cadillac Tax, this provision of the Affordable Care Act has been delayed yet again until 2022. Although this is helpful for employers concerned by the implications of this tax – especially those in high-cost states – a delay only defers this issue and does not represent a final resolution. Given that many employers set their benefit strategies years in advance, 2022 is not terribly far away. Among the actions employers are already taking or evaluating is curtailing or eliminating Flexible Spending Accounts (FSA) and Health Savings Accounts (HSAs) from their benefit offerings. Employee contributions to these accounts are counted toward the computation of whether the employee’s benefit plan exceeds the excise tax threshold. Efforts continue to repeal the tax entirely, but if full repeal cannot be accomplished, to reform the tax by excluding employee contributions to CDH accounts.

Strengthening HSAs.

Numerous bills have been introduced in both chambers of Congress to increase the availability and utility of HSAs to help individuals and families plan for and fund their health care needs. The focal point of discussion is around the HSA “gold standard” bills – S. 403 and H.R. 1175. These bills include a broad range of important provisions, including an increase in contribution amounts, allowing Medicare-eligible workers to continue contributing to an HSA, and restoring the tax-advantaged treatment of over-the-counter drugs and medicines. In addition to these bills, there is increased discussion regarding a proposal to allow HSA-qualified health insurance plans to cover certain chronic-care conditions below the deductible. This idea actually originated with the employer community and is now gaining traction.

Supporting and Enhancing FSAs.

As are an important option for employees, particularly since surveys indicate the vast majority of employers offer traditional health insurance that is not HSA-qualified as one of their options in their benefit plans. H.R. 1204 would raise the limit that an employee may contribute to an FSA from $2,650 to $5,000. This would benefit individuals and families with high healthcare costs, particularly those dealing with chronic conditions.

Based on what we heard in D.C., prospects for near-term action on these issues are somewhat limited. It is, after all, an election year, and as the calendar advances, the ability to move legislation that isn’t “must pass” becomes more challenging. In the healthcare arena, the biggest issues are the opioid crisis, stabilizing the individual insurance market, and prescription drug pricing/affordability. In addition, the administration continues to advance regulatory reform, including supporting innovation and flexibility in plan design, distribution, and state regulation and programs (e.g. Medicaid). With all this said, however, HSAs also continue to occupy an important place in the administration’s healthcare policy, and so there may be an opportunity to advance provisions that would strengthen these accounts.

As we have seen in the past, the healthcare landscape in Washington is highly fluid, so the best advice is to stay tuned for updates and developments as they happen

Chris Byrd

Chris Byrd brings more than 25 years of experience in employee benefits and banking to his role at WEX Health. A founder of Evolution Benefits in 2000, Chris played a key role in designing the proprietary architecture for the company’s prepaid benefits card.

Chris oversees the daily execution of WEX Health’s business and leads the company’s operations and service delivery, corporate development, merger and acquisition activity, and legal, industry, and government relations efforts.

He began his career in commercial banking, and prior to 2000, he focused on finance, strategy, and business development for Value Health and two start-up healthcare companies. He joined WEX Health in July 2014.

Chris, who serves on numerous industry boards, is a frequent speaker on emerging trends in financial services and benefits and is active in industry and government relations. He earned a degree in economics from Brown University.

10/09/2017

by Chris Byrd

Now that the Graham-Cassidy healthcare bill has failed, Congress will move on. We can expect it to concentrate instead on some pressing items on the calendar—things like agreeing on a continuing resolution to keep the government operating, raising the debt ceiling and reauthorizing programs like the Children’s Health Insurance Program. And of course, as we all know, congressional leadership is poised to take on the very complex issue of tax reform. In other words, after a six-month-long healthcare debate during which politicians expended a considerable amount of political and emotional energy, healthcare is largely off the table for now, barring the (unlikely) inclusion of healthcare in a tax reform package.

This means the Affordable Care Act remains the law of the land. While it is far from a perfect framework (and both sides of the aisle agree on that), the employer market has adjusted to it. The repeal and replace efforts of the past six months led some employers to place their benefit strategies on hold pending an understanding of what a new world order might look like. My advice: Don’t put off making decisions about your benefits strategy any longer. The deliberation and debate over a wholesale overhaul of the present system is finished. There will be some targeted efforts, most notably to stabilize the individual market, but the employer market framework is known—more of the same.

If there is disappointment among supporters of consumer-directed healthcare approaches, it is over the missed opportunity to pass reforms that would have expanded HSAs, restored the OTC tax benefit, eliminated the cap on FSA contributions and further delayed the implementation of the Cadillac Tax. In the absence of a broad reform bill, these supporters will continue to advocate for these provisions in separate pieces of legislation. But much of that effort may have to wait until after the end of the year, given that the attention of the tax-writing committees is fully focused on tax reform. The industry’s biggest priority continues to be to repeal, reform or delay the Cadillac Tax.

The market forces that are causing employers to continue to move toward consumer-directed, higher-deductible healthcare plans haven’t changed, and the trend of consumers having more skin in the game is inexorable because it works. Even without the legislative changes that would have been favorable to consumers with tax-advantaged accounts had the broad healthcare reform bills passed, these accounts will remain a very effective and attractive tool for both employers and consumers. Consumers should be making use of them, as they provide a significant benefit by helping them save money and become wise stewards of their healthcare dollars. Consumer-directed health approaches—and the tools and products that have sprung up around them—continue to be an effective part of the answer to the challenges presented by healthcare’s ever-increasing costs. As Congress gathers its energy for another round of discussion and debate—this time around tax reform—employers and consumers should not be distracted by what’s happening in Washington as it relates to their health benefits strategy.

Chris Byrd

Chris Byrd brings more than 25 years of experience in employee benefits and banking to his role at WEX Health. A founder of Evolution Benefits in 2000, Chris played a key role in designing the proprietary architecture for the company’s prepaid benefits card.

Chris oversees the daily execution of WEX Health’s business and leads the company’s operations and service delivery, corporate development, merger and acquisition activity, and legal, industry, and government relations efforts.

He began his career in commercial banking, and prior to 2000, he focused on finance, strategy, and business development for Value Health and two start-up healthcare companies. He joined WEX Health in July 2014.

Chris, who serves on numerous industry boards, is a frequent speaker on emerging trends in financial services and benefits and is active in industry and government relations. He earned a degree in economics from Brown University.

10/03/2017

In spite of the many headlines and healthcare bills that have centered on repealing or replacing the Affordable Care Act (ACA), the healthcare landscape in the United States today looks remarkably similar to the way it did when the ACA was passed seven years ago: The majority of Americans still receive insurance through their employers. Continue reading →

Continued uncertainty surrounds the Affordable Care Act repeal and replacement efforts. Last Friday morning the Senate voted down 49-51 the Health Care Freedom Act known as the “skinny repeal” legislation, failing to win the necessary support of three Republicans.

The past week involved heated days of legislative activity around healthcare reform. Senators debated and voted on the Obamacare Repeal Reconciliation Act (ORRA), which failed 45-55. This bill would have annulled the law and allowed Congress two additional years to replace it.Continue reading →

In May, the House recently passed the American Health Care Act (AHCA), which would partially repeal and replace the Affordable Care Act. The bill is now in the Senate. It is believed that changes will be made or the Senate will draft their own version of the bill.

Regardless, because the bill is being considered under a fiscal 2017 budget resolution it must comply with the Byrd Rule, meaning it would likely need to be signed into law by the end of September. But first, it will need to head back to the House for approval if modified in any way. Continue reading →

Talk about the “repeal and replace” of the Affordable Care Act (ACA) has been circulating throughout the industry and in the media for months now. Repeal and replace are actually two very different concepts in terms of affecting different aspects of the ACA. There’s also a third possibility that would be synonymous with “repair”. No matter the term or path, the outcomes therefore, would have vastly different consequences for every group involved – insurers, providers, hospitals, employers, etc.

Three Futures of the ACA

Although there are three paths lawmakers can take, there are many, many ways no matter which path they take, to enacting what they decide on. Meaning even once a decision is made it could be rolled out in a piecemeal approach under various administrative actions, stand-alone legislation or through state legislature moves.

Repeal Only

Looking at the first scenario this would essentially “repeal” the ACA budget-related provisions through a special budget process called reconciliation and not provide any health-reform replacement provisions. According to the Congressional Research Service paper, there are several aspects of the ACA that could be impacted by reconciliation in a repeal scenario:

Repeals the individual and employer mandate penalties

Eliminates the 40% excise tax for employer-sponsored “Cadillac Plans”

Repeals federal government subsidies for individuals to purchase exchange coverage

Repeals Medicaid expansion

Restores Disproportionate Share Hospital Funding

Repair

The second path lawmakers could take would be to “repair” the ACA, keeping most of it intact and making adjustments to a few of the provisions through the legislative process. ACA items that may be repealed/revised under this scenario are:

Repeals the employer mandate

Revises the individual mandate through a replacement option, such as a continuous coverage mechanism

Expands health savings account usage

Funds high-risk pools

Expands Medicaid, giving state more flexibility in plan design

Widens age-rate bands, increasing higher and lower rating flexibility

Replace

Lastly, the ACA can be “replaced” by one of several current proposals being considered by lawmakers. There is widespread concern that repealing the ACA without providing any replacement plan could cause destabilization in the markets, particularly in the individual market. Plans vary to the degree of addressing the following efforts:

Repeals individual mandate

Replaces income-based tax credits with age-based tax credits

Funds high-risk pools

Transforms Medicaid into block grants

Restores Disproportionate Share Hospital Funding

Conclusion

The health industry and employers need to consider the above scenarios and prepare their businesses accordingly. Companies will need to be flexible and resilient as the market undergoes future changes. The evolving landscape will create a new healthcare environment for everyone.